Frankfort, KY – Seniors in Kentucky can look forward to a mix of federal tax boosts and local benefits in the 2025 tax year. While the Commonwealth does not provide an extra standard deduction at the state level for those aged 65 and above, there are other meaningful ways retirees can lower their tax burden through state credits, property exemptions, and generous federal relief.
No Extra Standard Deduction from Kentucky
Unlike the federal tax code, Kentucky does not offer an additional standard deduction based on age. For the 2024 tax year, the standard deduction is set at $3,160, and this amount applies to all residents, regardless of age.
This may seem limiting, but the state has other targeted provisions to ease financial strain for older adults.
Seniors Benefit from State Tax Credits
Instead of a higher deduction, Kentucky provides a $40 nonrefundable tax credit for each resident aged 65 or older. This credit is claimed using Schedule ITC during annual tax filing. An additional $40 credit is available for individuals who are legally blind, allowing some to receive up to $80 in credits if both conditions apply.
These credits can be helpful in reducing the amount of state tax owed, though they cannot result in a refund if the total credit exceeds tax liability.
Property Tax Relief via the Homestead Exemption
The Homestead Exemption is a major source of tax savings for Kentucky homeowners aged 65 and up. Eligible seniors can exclude $49,100 of their home’s assessed value from property taxes for both 2025 and 2026—an increase from previous years.
This reduction is especially beneficial for retirees on fixed incomes, offering real savings on local taxes each year, as per Anthem.
Federal Support Through the “One Big Beautiful Bill”
At the federal level, the 2025 tax year brings expanded benefits thanks to the One Big Beautiful Bill (OBBB):
- Seniors 65+ qualify for a $6,000 extra deduction.
- Married couples where both spouses are 65+ may receive a $12,000 deduction.
- This deduction applies even if itemizing and is available through 2028.
- Income phase-out begins at $75,000 MAGI for individuals and $150,000 for couples.
Additionally, seniors will still receive the existing federal senior standard deduction bonus—$2,000 for single filers and $1,600 per spouse if married and filing jointly.
How the Savings Add Up for Seniors
For a retired Kentucky couple who owns their home and has limited income, these tax breaks can stack up:
- $80 in state tax credits (if both are eligible)
- $49,100 reduction in property value via the Homestead Exemption
- Up to $12,000 in federal bonus deductions, on top of standard deductions
That’s a powerful combination of state and federal support to reduce both income and property taxes.
Tax Planning Tips for Kentucky Seniors
To get the most from these provisions:
- Claim all benefits: Don’t forget the Schedule ITC and Homestead Exemption applications.
- Track your income: Stay below federal MAGI thresholds to maximize deductions.
- Reevaluate itemizing: Many may find the standard deduction (especially with the OBBB bonus) provides more value than itemizing.
Final Thoughts
While Kentucky does not offer an extra standard deduction specifically for seniors, it still delivers meaningful financial relief through targeted credits and property tax exemptions. When combined with expanded federal deductions, retirees can experience significant savings for the 2025 tax year.
What do you think about Kentucky’s senior tax benefits? Share your thoughts in the comments below.
